Capturing Some Part of Wealth Transfer

Avera Healthcare is a Sioux Falls, SD based hospital group of the Benedictine and Presentation Sisters with hospitals, clinics and partnerships in over 80 communities in SD, MN, IA, NE and ND. I was in Sioux Falls for their Rural Health & Community Vitality Conference, where I met a number of very passionate health care providers and ordinary citizens from small towns from those five states.

Bob Sutton, President of the South Dakota Community Foundation, presented a new study on the $38 billion transfer of wealth that will occur in SD over the next five decades. Their findings are not unlike what is occurring in many other states and is why I've continued to stress the importance of community foundations in our small towns. Many times I've made the statement, "If I could do one thing in every town that I visit, it would be to help set up a community foundation in each one."

The South Dakota Foundation was set up in 1982 with a $5 million donation from William McKnight (one of the M's in 3M) with the intention of helping the many rural areas of the state. That $5 million has grown to over $50 million today with partnerships in towns the size of Alpena (population 247) to Aberdeen (population 24,098).

One of Sutton's best quotes was, "The best time to plant a tree is twenty years ago. But, if you didn't plant a tree then, plant one today." Another was, "The number one indicator of great wealth in rural SD is Buick Centuries. The WWII generation is very thrifty and they drive Buick's. I guarantee you that there is someone with a $1 million net worth, when I spot a Buick Century and pick-up truck in the driveway."

He went on, "Each year an average of $760 million will be transferred from one generation to the next. The majority of that is in land and buildings in the state, but also includes stocks, bonds and CDs in the local banks. Unfortunately, most of those heirs don't live on the farms and they aren't coming back."

"Forty two of the 66 counties in the State of South Dakota will have less net worth than they have in 50 years, unless they start to do something today about this transfer of wealth. Are they just going to passively watch as that wealth gets transferred to Minneapolis, Denver, San Francisco and other places?"

Sutton challenged his audience to develop a wealth retention strategy of getting part of this wealth transfer converted into Community Foundations in rural South Dakota.